DGII Butterfly Strategy
DGII (Digi International Inc.), in the Technology sector, (Communication Equipment industry), listed on NASDAQ.
Digi International Inc. provides business and mission-critical Internet of Things (IoT) products, services, and solutions in the United States and internationally. The company operates in two segments, IoT Products & Services and IoT Solutions. It offers cellular routers for mission-critical wireless connectivity; cellular modules to embed cellular communications abilities into the products to deploy and manage intelligent and secure cellular connected products; console servers to provide secure and remote access to network equipment in data centers and at edge locations; and radio frequency products, including embedded wireless modules, off-the-shelf gateways, modems, and adapters under the Digi XBee brand. The company provides embedded system products under the Digi Connect, ConnectCore, and Rabbit brands; and infrastructure management products, comprising of serial servers, which offers serial port-to-Ethernet integration of devices into wired Ethernet networks; and universal serial bus solutions. In addition, it offers Digi Remote Manager, a recurring revenue cloud-based service that provides a secure environment for customers to manage their connected device deployment; Digi Wireless Design Services; and SmartSense by Digi for monitoring wirelessly the temperature of food and other perishable or sensitive goods, monitor facilities or pharmacies by tracking the completion of operating tasks by employees, as well as quality control and incident management for food service, healthcare, and transportation/logistics industries. Further, the company provides professional services, such as site planning, implementation management, application development, and customer training; data plan subscriptions; and enhanced technical support services.
DGII (Digi International Inc.) trades in the Technology sector, specifically Communication Equipment, with a market capitalization of approximately $2.46B, a trailing P/E of 56.87, a beta of 0.94 versus the broader market, a 52-week range of 30.69-69.81, average daily share volume of 301K, a public-listing history dating back to 1989, approximately 805 full-time employees. These structural characteristics shape how DGII stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 0.94 places DGII roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 56.87 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple.
What is a butterfly on DGII?
A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration.
Current DGII snapshot
As of May 15, 2026, spot at $61.98, ATM IV 37.00%, IV rank 8.11%, expected move 10.61%. The butterfly on DGII below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 34-day expiry.
Why this butterfly structure on DGII specifically: DGII IV at 37.00% is on the cheap side of its 1-year range, which favors premium-buying structures like a DGII butterfly, with a market-implied 1-standard-deviation move of approximately 10.61% (roughly $6.57 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated DGII expiries trade a higher absolute premium for lower per-day decay. Position sizing on DGII should anchor to the underlying notional of $61.98 per share and to the trader's directional view on DGII stock.
DGII butterfly setup
The DGII butterfly below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With DGII near $61.98, the first option leg uses a $58.88 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed DGII chain at a 34-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 DGII shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Buy 1 | Call | $58.88 | N/A |
| Sell 2 | Call | $61.98 | N/A |
| Buy 1 | Call | $65.08 | N/A |
DGII butterfly risk and reward
- Net Premium / Debit
- N/A
- Max Profit (per contract)
- Unbounded
- Max Loss (per contract)
- Unbounded
- Breakeven(s)
- None on modeled curve
- Risk / Reward Ratio
- N/A
Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit.
DGII butterfly payoff curve
Modeled P&L at expiration across a range of underlying prices for the butterfly on DGII. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
When traders use butterfly on DGII
Butterflies on DGII are pinning bets - traders use them when they expect DGII to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
DGII thesis for this butterfly
The market-implied 1-standard-deviation range for DGII extends from approximately $55.41 on the downside to $68.55 on the upside. A DGII long call butterfly is a pinning play: it pays maximum at the middle strike if DGII settles there at expiration, with the wing legs capping both the cost and the maximum loss to the net debit. Current DGII IV rank near 8.11% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on DGII at 37.00%. As a Technology name, DGII options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to DGII-specific events.
DGII butterfly positions are structurally neutral / pin (limited-risk, limited-reward); the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. DGII positions also carry Technology sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move DGII alongside the broader basket even when DGII-specific fundamentals are unchanged. Always rebuild the position from current DGII chain quotes before placing a trade.
Frequently asked questions
- What is a butterfly on DGII?
- A butterfly on DGII is the butterfly strategy applied to DGII (stock). The strategy is structurally neutral / pin (limited-risk, limited-reward): A long call butterfly buys one lower-strike call, sells two ATM calls, and buys one higher-strike call, paying a small net debit for a defined-risk position that maxes out if the underlying pins the middle strike at expiration. With DGII stock trading near $61.98, the strikes shown on this page are snapped to the nearest listed DGII chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are DGII butterfly max profit and max loss calculated?
- Max profit equals the wing width minus net debit times 100 (reached when the underlying pins the middle strike); max loss equals the net debit times 100. Two breakevens at lower-wing plus debit and upper-wing minus debit. For the DGII butterfly priced from the end-of-day chain at a 30-day expiry (ATM IV 37.00%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a DGII butterfly?
- The breakeven for the DGII butterfly priced on this page is no defined breakeven on the modeled curve at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current DGII market-implied 1-standard-deviation expected move is approximately 10.61%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a butterfly on DGII?
- Butterflies on DGII are pinning bets - traders use them when they expect DGII to settle near a specific level at expiration (often the prior close, a round number, or the max-pain strike) and want defined-risk exposure to that outcome.
- How does current DGII implied volatility affect this butterfly?
- DGII ATM IV is at 37.00% with IV rank near 8.11%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.